Syndicate Bank, Bank of India lower rates by 5-10 bps

MUMBAI: Bank of India and Syndicate Bank have taken a cue from the Reserve Bank of India and reduced marginal cost of fund based lending rates (MCLR) in the range of 5 to 10 basis points.

The Reserve Bank of India on Tuesday lowered the repo rate -policy rate at which it lends to banks -by 25 basis points to 6.25%. Bigger banks like State Bank of India and ICICI Bank had already reduced their lending rates a couple of days before the policy was announced.

From April of this year, the RBI has asked banks to arrive at lending rates based on MCLR formula wherein the rates are reset in frequent intervals ranging from one month to three years.

For a term of one year, Bank of India will charge 9.35%, against 9.40% earlier; while Syndicate Bank would charge 9.45% against 9.55%. The new rates are effective from October 7. Country's largest bank State Bank of India and the second-largest lender ICICI Bank reduced rates by 5 bps to 9.05% for one-year with effect from October 1.

Meanwhile, the RBI has said that it will review the MCLR mechanism of arriving at lending rates. RBI Governor Urjit Patel has expressed disappointment over the slow transmission of cuts in policy rates to lending rates. “The transmission of lending rates to bank bor rowers has been less than what anyone of us would have liked it to be,“ he said soon after announcing policy on Tuesday.